[ferro-alloys.com]Chinese steelmaker Ansteel is to take full ownership of the loss-making Karara magnetite project in the Mid West by buying out its Australian partner Gindalbie Metals for about $25 million.
Ansteel said today it would offer 2.6¢ a share for the outstanding 64.3 per cent of Gindalbie, which owns 47.8 per cent of Karara, 200km east of Geraldton.
The takeover will coincide with Gindalbie’s spin-off of its Mt Gunson cobalt and copper project in South Australia.
Gindalbie directors have unanimously approved the Ansteel offer, which will be put to Gindalbie shareholders via a scheme of arrangement.
The company said its independent directors believed the bid was in the best interests of shareholders, “having regard to the operating performance of Karara, its level of debt, the potential for future dilution due to cash calls and the ongoing requirement for financial support from Ansteel”.
Also, “the demerger will enable Gindalbie shareholders to retain exposure to the exploration and development of the Mt Gunson assets ... without the legacy issues of Gindalbie”.
As at December 31, Gindalbie had debts of $231 million. It wrote down the value of its Karara holding to nil five years ago.
The high-cost Karara project has struggled to produce its magnetite at a profit since entering production in 2013, with the subsequent downturn in iron ore prices weighing on the operation.
Ansteel’s offer price represents an 89 per cent premium to Gindalbie’s 30-day volume weighted average price.
(The West Australian)